Tuesday, July 17, 2012

U.S. to have highest corporate tax rate in the world

"Most of the time being number one is good. But when it comes to having the highest tax rate in the world, it is much better for a country to be bringing up the rear.

Currently Japan holds the inauspicious distinction of having the highest corporate income tax rate in the world (39.5 percent). The United States is a close second, only a few tenths-of-percentage points behind.

Japan will soon fall from the top spot because it has finally recognized what the rest of the industrialized world realized over a decade ago: A low corporate income tax rate is vital for economic growth in the global marketplace. As such, Japan just announced it will reduce its corporate income tax rate by 5 percentage points down to around 35 percent. This remains far above the 25 percent average rate of other industrialized countries, but for them it is a start.

Japan’s reduction will leave the U.S. in the uncomfortable position of having the highest corporate income tax rate in the industrialized world. Hopefully Congress will finally see fit to lower the rate now that we will hold that disreputable title."